PROJECT SUMMARY Islet transplantation represents the current cell therapy standard for type 1 diabetes (T1D). However, the gap between the availability of donor organs and the clinical demand for them calls for the development of alternative/renewable sources of insulin-producing cells. In addition to this therapeutic need, a steady supply of islets is also needed for research and drug discovery purposes. Human embryonic stem cells (hESc) differentiated into pancreatic ?-cell precursors are presently the subject of Phase I/II clinical trials. However, the success of this approach hinges on the assumption that the microenvironment that leads to effective maturation in a mouse model will be the same in human patients with autoimmune diabetes. The safety of partially differentiated hESc-derived products, efficacy of the macro- encapsulation devices used to shield them from allo- and auto-immunity, and lag time to functional maturation remain open questions. The use of insulin-producing cells that are mature and functional at the time of transplantation may circumvent some of these problems. However, despite claims to the contrary, there is no current protocol to date that yields ?-like cells capable of reversing diabetes right after transplantation. In collaboration with our partners at the University of Miami, Ophysio, Inc. has successfully developed a platform to aid in the terminal in vitro differentiation of pancreatic progenitors (PPs) of different origins (hESc and native murine pancreas). This patented technology is based on the accurate targeting of physiological oxygenation throughout cell aggregates in culture ?which conventional means of culture fail to achieve. Oxygen tension lies at the crossroads of key pancreatic differentiation pathways, and its evolution throughout development has been conclusively shown to drive cell fate. Here we seek to extend these principles to the terminal maturation of a novel sub-population of PPs that our collaborators have described in human non-endocrine pancreatic tissue (hNEPT), which comprises 98% of the pancreas and is routinely discarded after islet isolation. This sub-population, identified through in vitro lineage-tracing techniques, is characterized by its responsiveness to the FDA- approved bone morphogenetic protein 7 (BMP-7). hNEPT exposure to BMP-7 results in the efficient (up to 15% in preliminary data) generation of endocrine cells that secrete insulin at levels that fall right within the range published for human isolated islets and exhibit robust glucose responsiveness in vitro and in vivo. Our Phase II studies aim at capitalizing on our Phase I data. These include not only the proof of principle that oxygen modulation improves BMP-7-mediated conversion of hNEPT, but also new findings on the phenotype of BMP-7 responsive cells that will allow for their prospective isolation from raw hNEPT preparations. Our specific aims are: (1) To determine whether in vitro targeting of physiological pO2 in PDX1 (P2RY1)+/ALK3+-sorted hNEPT subpopulations results in functional ?-like cells capable of reversing diabetes in mice; and (2) To scale up the process using an entire organ (10-12 ml of hNEPT pellet after islet isolation) using Ophysio?s new T75 oxygen-modulating devices (designed in the context of our previous award 2R44DK083832-02). In addition to the optimization and scale up of the process, we will simultaneously establish cGMP manufacturing protocols, file for IP protection of the final method and begin licensing contracts with parties for use of the process to obtain the cells for research purposes. We contend that BMP-7-responsive PPs from hNEPT represent a valid alternative to hESc for clinical applications, as this technology capitalizes on current clinical strategies (islet isolation and transplantation) for which there are already well established networks; increased safety of adult cell products vs. hESc-derived ones; and ease of in vitro expansion/differentiation using a single, FDA-approved clinical product. Coupled with Ophysio?s technology for enhanced in vitro maturation, this approach has rapid translational potential for the treatment of diabetes mellitus.